BP to add $1 billion investment, two rigs to Alaska North Slope

BP is planning to add US $1 billion in new investment and two drilling rigs to its Alaska North Slope fields over the next five years due to changes in the state’s oil tax policy signed into law this month by Alaska Gov. Sean Parnell. These plans call for an increase in drilling and well-work activity, the upgrading of existing facilities and the addition of up to 200 jobs in the state, giving a boost to both the company’s operations and the state’s economy.

In addition, BP has successfully secured support from the other working interest owners at Prudhoe Bay to begin evaluating an additional $3 billion worth of new development projects. These projects, located in the west end of the Greater Prudhoe Bay Area, could continue for approximately 10 years, further increasing the state’s oil production and providing additional jobs.

“With this new tax law, the Alaska legislature and Governor Parnell have taken an important step toward improving Alaska’s long-term economic future,” Janet Weiss, BP Alaska region president, said. “Our announcement today should make abundantly clear that BP is committed to being a part of that future and to continuing to extend the life of North America’s largest oil field.”

BP Exploration (Alaska) will issue a request for proposals this summer for the two additional rigs in Prudhoe Bay. The first drilling rig is expected to be in place by 2015 and the second in 2016. This will increase BP’s rig fleet in Alaska to nine. Meanwhile, BP expects to increase well work as soon Q4 2013, a move that should improve the performance of existing wells at the Prudhoe Bay and Milne Point fields.

The additional development opportunities being evaluated by working interest owners are in the west end of Prudhoe Bay and include expansion and de-bottlenecking of existing Prudhoe Bay facilities, constructing a new drilling pad, and expansions of existing pads, including the drilling of more than 110 new wells. The appraisal phase will take two to three years and will include engineering work and securing regulatory approvals for multiple development projects.

“Now that an improved tax structure is in place, oil and gas projects can once again move forward, keeping Alaska competitive in the midst of America’s recent energy renaissance,” Ms Weiss said.

BP is also working with other companies and the state of Alaska to commercialize Alaska North Slope natural gas as part of a joint concept selection group focused on a South Central Alaska LNG project.